Lessons From the Great Default Crisis of 1975Roundup: Historians' Take
tags: debt ceiling, default
It appears as if the United States government will just barely avoid defaulting on October 17. It's not the first time that the date featured in fiscal history. Thirty-eight years ago, on October 17, 1975, New York City almost went bankrupt. Then, as now, conservatives in the White House pushed a style of brinksmanship that could have forced a major government to default.
The context, of course, was very different. New York City’s finances were under stress as the city tried to maintain its extensive local welfare state, despite the pressures of the recession of the early 1970s and the underlying economic problems it faced of industrial decline and middle-class flight. The city tried to borrow to cover a widening budget gap, but by 1975 the major banks refused to market its debt. New York’s mayor and governor—Abraham Beame and Hugh Carey—appealed repeatedly to Washington, D.C. Pointing to ailing corporations which had been able to obtain government funds, they argued that New Yorkers should not be made to suffer for problems that were the result of economic forces beyond the city’s control.
President Gerald Ford and his advisers (who included Donald Rumsfeld and Alan Greenspan) insisted that the city’s problems were its own responsibility. New York’s default, they claimed, would not have a significant economic impact. “There is no short cut to fiscal responsibility,” Greenspan, then chairman of the Council of Economic Advisors, wrote in one memo....
comments powered by Disqus
- Rubio Surges Into Second In New Hampshire
- Branstad Says Cruz Ran ‘Unethical’ Campaign
- Christie Highlights Santorum’s Endorsement of Rubio
- Portman Comes Out Against Trade Deal
- Megyn Kelly Gets a Book Deal
- A Big List of the Bad Things Clinton Has Done
- An Unambiguous Sign Sanders Won Last Night’s Debate
- Still Friends at the End
- Quote of the Day
- Trump Still Leads as Clinton Slips
- Clinton Can’t Shake Image as Wall Street’s Friend
- Maddow Doesn’t See Sanders Winning
- Why Does the Media Still Shield Chelsea Clinton?
- Bush Jokes His Mother May Have Abused Him
- Rubio Closes the Gap in New Hampshire
- Britain largest home is saved for the nation
- Shelter and the slums: capturing bleak Britain 50 years ago
- Researchers Find More Women Buried At Stonehenge Than Men
- Tourism spot for Colonial Williamsburg shocks some New Yorkers during Super Bowl 50 for use of 9/11 attack footage
- We asked 6 political scientists if Bernie Sanders would have a shot in a general election
- Mary Beard, herself a bestselling author, wonders why more women historians aren't
- Princeton U. historian Imani Perry claims mistreatment in parking ticket arrest
- Retired historian George Dennison remains on the payroll at the U. of Montana while faculty are cut
- The Atlantic profiles exciting ways to teach history
- LDS Church has gone from 0 to 4 historians specializing in women’s history